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Saturday, May 14, 2011

The willingness of U.S. Government officials to print money rather than tackle tough debt-cutting measures is in sharp contrast to the approaches to relieving the public debts in the E.U. The state of Ireland, for example, nearly doubled its package of spending cuts and tax increases in 2010 to rein in its huge deficit. Even so, borrowing costs in the states of Spain, Portugal and Greece spiked upward again in late 2010 and in 2011 amid bailouts by the E.U. via contributions from the state governments. The issues are as much political as economic.

Friday, May 13, 2011

The history of the E.U. and its predecessor, the EEC, can be characterized as a series of fits and starts. For example, at one point France vetoed the accession of the U.K. as a state. Before long, Britain was in and the EEC could step forward. At another point, the proposed “constitutional treaty” was voted down in referendums in two states. A few years later, the Lisbon amendment was ratified and the E.U. could adjust, albeit piecemeal, to being larger. Without knowing the overall pattern in this history, one could easily take one of the backward steps for the demise of the union. Even an awareness of the pattern is not sufficient to arrest doubts. Moreover, a back step can be of sufficient symbolic value that it breaks even the “fit and start” pattern with truly dire consequences. Given the overall pattern, however, it is difficult to discern such a baleful symbolic move back.

Wednesday, May 11, 2011

Wall Street profits totaled $21.4 billion during the first three quarters of 2010. The prior year's record of $61.4 billion was fueled by the bailout financed by American taxpayers. Wall Street paid out $20.3 billion in bonuses on the 2009 profits. According to New York City Comptroller John Liu, "The astounding recovery of financial firm profitability in 2009 has been followed by a mixed year in 2010, yet total compensation in the industry is expected to be up modestly once year-end bonuses are paid." Goldman Sachs’ CEO Lloyd C. Blankfein and his top subordinate executives collected about $111.3 million in stock in January 2011. It was a delayed payoff from 2009 and the bank’s record-setting 2007 bonuses, according to a Bloomberg News report. Within a year after the bonuses had been approved, Goldman Sachs took $10 billion from the U.S. Treasury, converted to a bank and was borrowing as much as $35.4 billion a day from Federal Reserve emergency programs, Bloomberg reported. In 2010, the bank paid $550 million to settle U.S. regulators’ fraud charges related to a mortgage-security company sold in 2007.